Representative of defunct garment factory objects to default judgment

A representative of defunct garment manufacturer Grace International Inc. appeared in federal court last Thursday to object to a default judgment against the factory in connection with a lawsuit filed by a former employee.

Zhuo Huai informed the U.S. District Court that he was authorized by Grace International’s owner to represent the company.

Huai, who appeared with an interpreter, expressed his objection to the default judgment issued against the company. Huai, however, stated he was not an attorney.

Attorney Joseph Horey, counsel for plaintiff Xian Xiaoli, appeared in the courtroom.

U.S. District Court for the NMI Chief Judge Alex R. Munson reset the hearing for July 10, 2008 at 4:30pm.

Munson advised Huai or Grace International that they need an attorney to represent them in court.

Xiaoli, who allegedly acquired a disability during the course of her third year employment at the factory, filed a discrimination lawsuit against Grace International for not renewing her contract.

Xiaoli asked the court to order the company to pay her damages, court costs, and attorney’s fees. The plaintiff then filed a motion for preliminary injunction.

In opposition to the motion, attorney F. Matthew Smith, counsel for Grace International, said under the law and under these circumstances, the company should not be unfairly burdened as it tries to defend itself from these meritless claims.

Smith said even if Xiaoli was entitled to a one-year contract renewal, her damages would be in the neighborhood of $10,000—not $75,000. Even doubled or with attorney fees, a reasonable estimate is far below $75,000, he added.

In May 2007, the federal court prevented Grace International and its officers or shareholders from removing assets from the CNMI until further court order.

Munson barred Grace International from dissipating assets to the point that less than $75,000 in assets remain in the Commonwealth.

Munson issued such order in granting Xiaoli’s motion for preliminary injunction.

Last May 30, Xiaoli filed a motion for order in aid of judgment. In that motion, Horey said that on Dec. 17, 2007, the federal court entered a judgment in plaintiff’s favor in the amount of $78,103.87.

Horey said Grace International has closed operations on Saipan, defaulted in the case, and has not paid the judgment.

The lawyer said Grace International remains in possession of a leasehold interest in its factory site on Texas Road, Susupe, and any chattels in the factory.

Horey moved the court to issue an order, transferring title of Grace International’s leasehold property to Xiaoli. He also asked the court to transfer to the plaintiff all of Grace International’s rights to demand and recover from the United States any Social Security taxes wrongfully or erroneously paid by Grace.

The motion, which was set for a hearing last Thursday, will be heard on July 10 because of the objection.